Bankruptcy: Its Multifaceted Benefits And How It Helps You Recover Financially

Bankruptcy: Its Multifaceted Benefits And How It Helps You Recover Financially When you weigh the decision if you should file for bankruptcy, most of your inputs are likely to come from your family, friends, and articles, blogs you read on the Internet. Not all information you get to hear or read is correct. Bankruptcy is surrounded by more myths and misunderstandings than facts.

At the law firm of Recovery Law Group, we want to feed you only accurate information. This occurs to be a major decision in everyone’s life. Our bankruptcy attorneys want to ensure that you understand the top benefits that filing for bankruptcy can bring to life.

It stops foreclosure A bankruptcy filing stops foreclosure proceedings. It buys you some time, so you can decide upon your next move. Perhaps, you wish to keep your home and can also afford the following payments. If not, it might be time for you to consider downsizing. Choices for keeping your home from getting sold in foreclosure varies based on whether you have filed Chapter 7 or chapter 13 bankruptcy.

It puts halt on repossession Bankruptcy helps you save your other properties such as cars and expensive items. When you file chapter 13 bankruptcy, the bankruptcy court issues an “automatic stay” order for the filer, which leads to prohibiting debt collection attempts of all sorts. The stay applies to most, but not all debt types and creditors. For what, we’ll suggest you consult our attorneys. The ‘automatic stay’ order stops your car’s repossession too.

It abolishes certain tax debts Tax elimination is possible in Chapter 7 bankruptcy, but only if your debts have qualified for elimination and you have qualified for chapter 7 bankruptcy.

Remember, not all types of debts can be discharged. Here’s when you can eliminate a tax debt – Your federal income taxes can be wiped out in chapter 7 bankruptcy only when the following conditions are proven true – 

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The taxes are income taxes: There are taxes other than income taxes and these include fraud penalties and payroll taxes. Taxes other than income taxes are never to be eliminated in bankruptcy.

You haven’t committed willful evasion or fraud: If you had filed a fraudulent tax return or willfully attempted avoiding paying taxes, for example using a fabricated Social Security number on your tax return, bankruptcy can never help in that scenario.

Your tax debts are at least 3-year old: To wipe out the tax debt, the tax return should have been primarily due minimum three years before you have filed bankruptcy.

You pass 240-day rule: The income tax debt has to be evaluated by the IRS at least 240 days before you declare bankruptcy, or must not have been evaluated yet. In this scenario, the limit might be extended if the IRS appends collection proceedings due to a compromising offer or a former bankruptcy declaration.

It discharges unsecured debt Credit card debts are the commonest reason why more and more people are filing for bankruptcy. If you’re aiming to completely eliminate your credit card debts, chapter 7 bankruptcy is the only option. If you don’t qualify to file for chapter 7 bankruptcy, you’re then left with chapter 13 bankruptcy. It will organize all your secured/unsecured debts into a single manageable monthly payment system.

Once you have paid for 3-5 years, any remaining unsecured debt will then be discharged.

It discharges a medical debt Apart from credit cards, medical debts are the second commonest reason more and more people are filing for bankruptcy. Unforeseen diseases or accidents can quickly result in the mounting medical bill. For these debts are unsecured in nature, they can be discharged in chapter 7. In case you don’t qualify for chapter 7, medical debts can be reorganized in chapter 13 bankruptcy.

It puts an end to wage garnishment, judgments, and lawsuits If the creditors are currently garnishing your wages or you have got a due judgment against you, filing for bankruptcy will stop the collection efforts and garnishment.

It ends creditor harassment Once you have filed for bankruptcy, creditors can no longer contact you. The prolonged, pain-stricken harassment finally stops, meaning you have got room to breathe. If any creditor attempts to contact you, he or she can be sued.

Bankruptcy proves to be more effective than debt management services There’re hundreds of debt management and negotiation agencies across America, offering help for financial troubles. Sadly, all these agencies typically bring more damage than any good. Solutions these companies provide are optional for the creditors, meaning even if you’re in the program, you might still have to pay off all your debts at once. Bankruptcy, on the other hand, ensures court protection from such worries.

Bankruptcy ensures financial recovery after job loss Expenses never stop even after you lose your job, do they? Without any earning, an individual can quickly fall behind all of his bills and mortgages. Bankruptcy can help discharge most of your debts and also offer you some time to catch back on your house/car payments as you search for a new job.

Bankruptcy ensures a fresh start

By discharging debts and minimizing your debt-to-income ratio, you choose to become a desirable candidate for further loans. You are offered a clean slate on what you can start rebuilding your credit again.

So, if you’ve been battling whether or not should you file for bankruptcy – contact our bankruptcy attorneys at Recovery Law Group.